Tokyo looks to rev up IPO market by luring startups across Asia

IPOs have been booming across the region, with India setting a record last year and Hong Kong proceeds at a multiyear high.

• Tokyo Stock Exchange aims to attract Asian startups for cross-border IPOs
• 20 startups, mainly from Singapore and Taiwan, join TSE's IPO initiative
• TSE expects over 20 cross-border IPOs in next 3 years, up from 4 in 2023-2025

Did our AI summary help?

Tokyo Stock Exchange Inc. is looking to strengthen its market for initial public offerings by pitching itself as a venue for cross-border listings by startups in Asia.

The exchange is offering help in fundraising and IPO preparations with partners including banks, auditors and venture capital funds in Asia. So far, 20 startups have been chosen for the initiative, its website shows, with half of them based in Singapore and Taiwan.

IPOs have been booming across the region, with India setting a record last year and Hong Kong proceeds at a multiyear high. Tokyo is looking to carve out its own slice of the market, counting on its deep pools of liquidity being attractive for companies that are too small for the US market and are concerned with geopolitical risks in Hong Kong.

“We are looking to have as many companies whose shares keep rising over a long period as possible and that’s not limited to Japanese firms,” Tokyo Stock Exchange President Moriyuki Iwanaga said.

The plan may result in more than 20 cross-border IPOs in the next three years, according to Mitsubishi UFJ Trust and Banking Corp., one of the partners in the initiative. That compares with just four such deals in 2023-2025, according to the bourse’s website.

“Liquidity after listing is significantly important for companies as management engages with shareholders and stakeholders to raise corporate value,” said Atsushi Takahashi, a senior manager at the trust bank.

Tonik Financial Pte., a Mizuho Bank Ltd.-backed digital bank based in the Philippines that joined the TSE’s initiative, is actively exploring listing in Tokyo in the next two or three years, founder Greg Krasnov said, citing the access to liquidity and investor base specifically.

Some companies are also weighing a Tokyo IPO as they look to expand in Japan, especially in the entertainment and tourism industries.

“So many Asians love to go to Japan,” said Ming Chen, chief executive officer of KKday, an online travel platform operator based in Taiwan, which generates about half of its revenue from Japan. “If we can list in Japan, we can build more trust with our suppliers, local partners.”

The bourse failed to achieve its goal to list 20 cross-border companies in its mid-term management plan from April 2022 to March 2025, with only five such deals, including e-commerce platform operator Anymind Group Inc. and space technology company Astroscale Holdings Inc. according to its website.

The bourse is also looking at cross-border IPOs as a way to beef up its pipeline. Tokyo is considering raising the bar for companies to stay in the public market to ensure the growth of listed firms.